ORDER
S. Kalyanam, Member (J)
1. This appeal is directed against the order of the Collector of Central Excise (Appeals), Madras, dated 28th February 1989 rejecting the appellants claim for deemed Modvat credit in respect of steel bars lying in stock with the appellant as on 5-10-1987 on the ground that in terms of Rule 57H of the Central Excise Rules, 1944 as amended in 1987, credit of duty on inputs could be availed of by a manufacturer immediately before obtaining the dated acknowledgment of the declaration and restricting the benefit in respect of the inputs to one month prior to the date of receipt of the declaration.
2. Shri A. Vijayaraghavan, Learned Consultant for the appellant submitted that when the lower Appellate Authority has not disputed the fact that the goods were purchased from the open market and deemed credit would be available under Rule 57E proviso, his reasoning that credit will be available only for a period of one month prior to the filing of the declaration, is not tenable. The Learned Consultant also in this context relied upon the ruling of the Bench of this Tribunal in the case of ”Soft Beverages Pvt. Ltd. v. Collector of C. Ex., Madurai’, dated 6-6-1989 reported in 1989 (44) ELT 66 (Tri.) (Order No. 274/1989).
3. Heard Shri P.B. Vedantham, the Learned DR.
4. On going through the records we find that it has been found by the lower appellate authority in the impugned order that the inputs in question were received by the appellant between the period 24-6-1986 to 5-10-1987 on various dates and the inputs were lying in stock after the Government of India had issued necessary orders for availing deemed credit in regard to the same. The learned Collector (Appeals) in para 4 of the impugned order has observed as under. –
“…If the goods are purchased from the market under invoice and the same were covered under the Govt. of India’s order existing during the relevant period, inputs credit cannot be denied on the ground that the same are not accompanied by gate pass unless it is proved by the Supdt. or the Asstt. Collector that the goods are identifiable as non-duty paid goods. That being the only issue, the deemed credit is allowable as applicable during the relevant period. However, under Rule 57H which has amended in the year 1987 it is stated that the Asstt. Collector may allow credit of the duty paid on inputs received by a manufacturer immediately before obtaining the dated acknowledgement of the declaration, if he is satisfied that such inputs are lying in stock and such inputs are used in manufacture of final products which are cleared from the factory, on or after the 1st day of March 1987 and that no credit has been taken by manufacturer in respect of such inputs under any other rule or notification provided that such inputs are not used in manufacture of final product which is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rale of duty. Therefore, inputs immediately received before the dated acknowledgement of the declaration, if other conditions stated above are satisfied are eligible for Modvat credit under the Govt. of India’s letter which was in force during October, 1987. The question is what is the definition of ‘immediately received before dated acknowledgement’. I have held in earlier appeal cases that a period of one month can be taken as period immediately preceding the date of acknowledgement of the declaration under Rule 57G. I do not see any reason to depart from this decision in the absence of any definition of the words ‘immediately before obtaining dated acknowledgement’ in the Rule….”
The Bench of this Tribunal in ‘Soft Beverages Pvt. Ltd.’ case (cited supra) has gone into the scope of Rule 57H and held as under. –
“In the context of the scheme of MOD VAT what is relevant is receipt of the goods with evidence of payment of duty and the filing of the declaration in that regard. So far as the filing of the declaration by the appellants is concerned the same has been done correctly under the law and the appellants have claimed the benefit in respect of the inputs which were received by them before they filed the declaration as required under the law. The meaning in this context, therefore, to be given to the words ‘immediately before’ is as set out above i.e. prior to and only in that context the purpose of the MODVAT scheme as envisaged under Rule 57H can be effectuated. The meaning of the words to be given has to be such as would advance the legislative intent for which a particular legislation has been introduced and in this background we hold that as the inputs were received before the appellants filed a declaration and these were in stock and necessary evidence of duty payment etc. was available, the benefit of the MODVAT scheme cannot be denied to the appellants. Any other interpretation would only lead to incongruous situation where it may so happen that the goods which were manufactured even in the previous year and had not yet been cleared from the manufacturer’s factory or were in the stream of the market for being brought to the factory for manufacturing the end product in respect of which MODVAT credit was available, the same would on receipt even after filing of declaration for the benefit of the MODVAT credit could be taken into account and the goods which were received much earlier and lying in stock with the appellants would not get the benefit.”
Following the ratio of the Bench ruling cited supra, we hold that the reasoning of the lower Appellate Authority in restricting the period for availing deemed credit to one month preceding the filing of the declaration, is not sustainable in law. In this view of the matter, we set aside the impugned order and allow the appeal.